Typically, business owners go to the bank for their business loans, but not all bank applications get approved. Thankfully, there are credit unions and alternative lenders.
Credit unions
Credit unions and banks are very similar. However, credit unions are nonprofits that their customers own. The small business loan products that they offer are comparable to a bank.
When should you get a loan from a credit union?
- If you meet the requirements of credit unions like credit score, collateral, business plan, etc. and you are willing to be their member
- If you do not have an urgent need for funding and you do not have a problem waiting 30 to 60 days to process the loan
When should you not get a loan from a credit union?
- If your personal and business credit history are less than stellar
- If you do not have a very detailed business plan that outlines your business, marketing plans, competition, and products or services
- You are not their member and do not want to open an account with them
Alternative in lenders
Alternative lenders believe that start-up and successful businesses should not need to scramble for them to get affordable financing. According to reports, they offer several funding options with more ease, speed, as well as flexibility compared to other sources.
When should you get a loan from alternative lenders?
- You have a less than perfect credit – You need someone who would see your potential, what you built, and support your efforts through financing. The requirements in alternative lenders are less stringent, and their application process is faster
- You do not mind if you pay a bit more interest as long as you can get a great loan and take your business to the next level – Although alternative lenders have a slightly higher interest rate than the bank, you have a greater chance of approval
- You need quick financial solutions to keep your business moving – Alternative lenders often make quick decisions. They also have an easy application and approval process
When should you not get a loan from alternative lenders?
- You do not like taking a bit more interest in exchange for convenience and fast approval – Alternative lenders take more risk because they have less stringent credit requirements. So, their interest rate is usually a little higher too.
